Merck unit to pay $31 mln to settle fraud claims by U.S. states

By Daniel Wiessner

Oct 15, (Reuters) - A subsidiary of Merck & Co has agreed to pay U.S. states $31 million to settle claims that it overcharged their Medicaid programs for an antidepressant it had sold at a discount to pharmacy companies, attorney generals from three states said on Wednesday.

The officials from Idaho, New York and Florida said Organon USA Inc offered the drug, Remeron, to nursing home pharmacies at a discount to encourage its use over competitors. At the same time, the company reported the full cost of the drug when seeking reimbursements from state Medicaid programs, the states claimed.

New Jersey-based Organon, which did not admit any wrongdoing, also was accused of improperly promoting use of the drug by children and teens.

The agreement, which includes Washington, D.C., and every state besides Arizona, settled whistleblower lawsuits filed in 2007 in federal courts in Massachusetts and Texas. Under the deal, New York will receive about $2.5 million, Idaho about $53,000, and Florida $483,000, the states' attorney generals said in separate statements.

"Preserving the integrity of our Medicaid program and weeding out those who seek to defraud it is a top priority for my office," New York Attorney General Eric Schneiderman said.

A spokeswoman for Merck said the company was "pleased to put this matter behind us." Organon, originally based in the Netherlands, was acquired in 2007 by Schering-Plough Corp, which later merged with Merck.

(Reporting by Daniel Wiessner; Editing by Ted Botha and David Gregorio)